Conservatives Blame Financial Crisis on Blacks

Conservative Hate Mongering Blaming Blacks for Nation’s Financial Crisis
By Robert N. Taylor

Somehow and in some way there are those in America, usually right-wing conservatives, who can manage to blame Blacks and poor people for just about everything that goes wrong in this country. The latest example is the sometimes subtle and the sometimes overt faulting of African Americans and other low-income minorities for the nation’s current financial crisis.

The argument on “crazy white men” radio talk shows, on neo-conservative media outlets such as FOX Cable News and even among some right wing politicians is that the credit crisis was caused when banks and mortgage companies extended too many housing loans (so-called sub-prime mortgages) to minority group members with poor credit ratings and weak abilities to repay.

When these people began to default on these loans, the conservatives argue, the nation’s entire financial system began to crumble and eventually led to the government’s $700 billion bailout (with our current and future tax money) of financial giants on Wall Street.

These arguments are superficial, disingenuous, racist and show contempt for struggling working class people.

Here is the truth. The financial crisis was caused by capitalism gone wild. Beginning in the 1980s under President Ronald Reagan and culminating in 1998 when President Bill Clinton signed legislation freeing banks from the restrictions of the Glass-Steagall Act, our politicians (led by people like John McCain) engaged in an orgy of deregulating financial institutions from rules and regulations which had been placed on them following the Great Depression of the 1930s.

These rules and regulations were placed on financial institutions when some then wise economists and politicians grasped (at least in a limited manner) what had caused the Great Depression. But with memory of the Great Depression having faded, banks and other financial giants began to pressure Congress to free them from the very restrictions which had been implemented to prevent another Great Depression.

Once freed, the investment banks went wild. Driven by the profit-at-any-cost-God, they started speculating, creating loan packages which prior to deregulation they would have never touched and even securitizing these bad loans and selling them to both other U.S. and foreign financial institutions.

They were even freed of requirements that they hold a certain amount of money in reserve as a guard against people defaulting on loans. Further, they safeguarded themselves by convincing insurance companies to insure these bad loans so that they could get paid even if borrowers failed to pay. This is why insurance giant AIG fell.

Finally, the very nature of capitalist economics is that it tends to concentrate ever increasing amount of money at the top of society while making life increasing difficult for the middle and lower classes. In other words, the super rich had more money than they knew what to do with. So they engaged in speculation – another word for economic gambling.

This entire house of cards was based on the assumption that housing prices would continue to rise forever. But when they did not and millions of people found themselves struck with burdensome mortgages which were becoming larger than the actual value of the house, they began to default.

The true lesson is that unregulated, profit-hungry capitalism destroys itself because left entirely to itself, it will concentrate money at the top of society and deprive everyone else. Blacks did not cause the financial crisis. Super rich financial corporations did.

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